Investment Committee Summary
| Rating | HOLD · HOLD (5-tier) |
| Classification · conviction | deep value · low |
| Triangulated fair value | $58.92 (-19% vs spot · triangulated FV) |
| 12-mo scenario PWEV | $74.40 (+3% vs spot · 12m PWEV) |
| Next catalyst | 2026-07-22 — Quarterly earnings |
| Primary thesis-break | Organic revenue growth / order backlog < flat-to-negative for two consecutive quarters (2 consecutive prints) |
Decision detail — rating tables & Research OS strip
Rating: HOLD
HOLD (5-tier) · deep value · conviction: low
| Metric | Value |
|---|---|
| Current Price | $72.45 |
| Triangulated Fair Value | $58.92 (-19% vs spot · triangulated FV) |
| 12-mo Scenario PWEV | $74.40 (+3% vs spot · 12m PWEV) |
| Forward P/E | 14.6x |
| Market Cap | $7B |
| 52-Week Range | $54.15–$72.50 |
EPS basis for the forward P/E and all scenario multiples: consensus forward EPS (broker-adjusted, non-GAAP).
Methodology: Valuation triangulated across five independent anchors — Monte Carlo (Student-t + regime switching), an independent DCF, peer re-rating, a sum-of-parts, and a scenario-weighted PWEV. Figures reconciled to Alpha Vantage 2026-07-24. Each chart below sits with the part of the thesis it evidences.
General research for a skeptical institutional reader. Not personalised investment advice. The risk framework below is an illustrative model construct, not an instruction to trade. Figures as of the analysis date; verify before acting.
Decision Support — Research OS jump to detail ↓
| Conviction | Exp. return (1y) | Rules stance | Next catalyst |
|---|---|---|---|
| 52/100 (32th pct) | +3% 1yr expected | Hold | 0d — FOMC rate decision + press conference |
Full breakdown — conviction components, position sizing, probability-return distribution, decision rules, factor & portfolio interaction, options intelligence and the catalyst timeline — in the Decision Support sections below. Model output for research; not individualised advice.
📎 Download the full model (Excel) — DCF line items, scenarios, sensitivity, assumptions, and extended fundamentals.
Recommendation: HOLD
Balanced: triangulated fair value $58.92 (-19% vs spot); the outcome hinges on Gross Margin. The debate is Gross Margin — a fundamental call.
Investment Thesis
At the current quote Taylor Morn Home is fairly valued vs the engine's triangulated fair value (+3%). The business — Taylor Morrison Home Corporation, is a public housing builder in the United States. — runs an operating margin near 11% on ~11% ROE. The engine's HOLD rests on the 'homebuilders' driver set and the cluster's house view; the bull case is upside re-rating if the demand cycle inflects.
The dashboard below is the whole argument on one page: spot ($72.45) against each valuation anchor, the scenario tree, technicals and the options-implied move.
Anti-Thesis (The Real Bear Case)
The bear case is a demand downcycle that compresses volumes and the 11% margin simultaneously, with the multiple de-rating as cyclical earnings roll over — the structural scenario in the model. For a mid-cap with thinner coverage, a single guidance cut can re-rate the stock faster than a large-cap peer.
Key Debate
Gross Margin explains 57% of Monte Carlo outcome variance — the single variable that decides which side is right.
What the Market Is Pricing In
At the current price, the market pays 11.3× consensus forward EPS, vs the house DCF terminal 13.0×, and a peer median 13.415×. The house DCF sits 39% below spot, so the market is pricing in more than the house case — roughly 3.7pp of revenue CAGR.
Variant perception: the house view is above-consensus, and the thesis is primarily growth-driven.
| Metric | Consensus | House | Importance |
|---|---|---|---|
| Revenue | 7.2 | 7.8 | High |
| EPS | 6.4 | 5.0 | Medium |
| Target price | 66.8 | 74.4 | Medium |
Scenario Analysis
The tree runs from a structural 'Structural — Affordability / Rate-Lock Demand Reset' downside ($22.32) to a 'Spike — Tight Supply Pricing' bull case ($150); the probability-weighted blend (PWEV $74.40) is +3% versus spot.
| Scenario | Probability | Target | Return vs spot |
|---|---|---|---|
| Structural — Affordability / Rate-Lock Demand Reset | 22% | $22.32 | -69% |
| Cyclical Downturn — Order Slump | 18% | $44.29 | -39% |
| Base — Mid-Cycle Orders + Margins | 32% | $77.44 | +7% |
| Upcycle — Rate Cuts / Volume | 20% | $124 | +70% |
| Spike — Tight Supply Pricing | 8% | $150 | +108% |
| Probability-Weighted (PWEV) | — | $74.40 | +3% |
Scenario rationale — what each probability buys (the driver path behind every target):
- Structural — Affordability / Rate-Lock Demand Reset (22%, $22.32). Structural impairment — affordability / rate-lock demand reset: earnings AND the multiple compress together. Target sits below the 52-week low by construction. Drivers — implied_target: 22.32; probability: 0.22.
- Cyclical Downturn — Order Slump (18%, $44.29). Cyclical downturn — new-home demand (rates, affordability, household formation) + gross-margin cycle weakens for 1–2 years before normalising. Drivers — implied_target: 44.29; probability: 0.18.
- Base — Mid-Cycle Orders + Margins (32%, $77.44). Mid-cycle — normalised new-home demand (rates, affordability, household formation) + gross-margin cycle; disciplined capital allocation; steady returns. Drivers — implied_target: 77.44; probability: 0.32.
- Upcycle — Rate Cuts / Volume (20%, $124). Upside — rate cuts + volume recovery lifts earnings above mid-cycle; the multiple expands modestly. Drivers — implied_target: 123.51; probability: 0.2.
- Spike — Tight Supply Pricing (8%, $150). Upside tail — sustained tight conditions or a structural re-rate on rate cuts + volume recovery. Drivers — implied_target: 150.42; probability: 0.08.
Valuation Triangulation
Five anchors — but read them with their basis in mind. The Monte Carlo, the DCF terminal, and the peer re-rate all key off a market multiple, so they are not fully independent; only the discounted cash flows themselves are genuinely multiple-free. The discipline is to read the spread and weight the cash-based view, not to treat five numbers as five independent votes.
| Method | Basis | Fair Value | vs Spot |
|---|---|---|---|
| Monte Carlo median (Student-t + regime) | multiple | $67.22 | -7% |
| Peer EV/Revenue re-rate | multiple | $86.82 | +20% |
| Scenario PWEV | multiple | $74.40 | +3% |
| DCF (5-year + terminal) | cash flow + terminal × | $44.31 | -39% |
| Triangulated (weighted) | — | $58.92 | -19% |
Peer EV/Revenue re-rate — 0% weight: it duplicates the peer-multiple information already carried by the Peer P/E anchor while ignoring margin mix; weighting both would double-count the peer view. Shown as a cross-check.
Rating vs blend — the key debate. The rating tracks the multiple-discipline fair value (Monte Carlo $67.22 + scenario PWEV $74.40, ≈ spot); the weighted blend $58.92 (-19%) sits below it because the cash-flow DCF ($44.31) is materially more conservative than the market multiple. Whether the current multiple is justified is the central question for this name — and the principal downside risk to the rating.
Monte Carlo — the distribution, not a point
10,000 paths, Student-t shocks (fat tails) with a regime-switching overlay. The median lands at $67.22 and 45% of paths finish above spot. The variance decomposition shows the gross margin is the dominant swing factor (57% of variance). The fundamental driver, not the multiple, sets the spread — a cleaner setup.
DCF — the cash-flow anchor
Independent of the market multiple: a 5-year path, WACC 10.0%, 13x terminal FCF multiple → $44.31. This anchor is deliberately the heaviest (47%): it is the valuation least hostage to the current multiple regime.
Peer benchmarking — relative value
Against the peer cohort, re-rating to the peer-median forward multiple (P/E 13.415x) implies —. A premium is only justified by superior growth/margins; otherwise it is multiple risk. Weighted just 0% so the market's mood does not drive the fair value.
Across all anchors the spread is 57% of the median — wide (genuine disagreement — the blend carries low valuation confidence).
Sensitivity
DCF/share — WACC × terminal multiple
| WACC ＼ Term× | 9.1x | 11.0x | 13.0x | 14.9x | 16.9x |
|---|---|---|---|---|---|
| 8% | $35.00 | $42.00 | $50.00 | $57.00 | $64.00 |
| 9% | $33.00 | $40.00 | $47.00 | $54.00 | $61.00 |
| 10% | $31.00 | $38.00 | $44.00 | $51.00 | $57.00 |
| 11% | $29.00 | $35.00 | $42.00 | $48.00 | $54.00 |
| 12% | $28.00 | $33.00 | $40.00 | $45.00 | $52.00 |
DCF/share — revenue CAGR Δ × op-margin Δ
| CAGRΔ ＼ MgnΔ | -3.0pp | -1.5pp | +0.0pp | +1.5pp | +3.0pp |
|---|---|---|---|---|---|
| -3.0pp | $17.00 | $27.00 | $38.00 | $48.00 | $59.00 |
| -1.5pp | $19.00 | $30.00 | $41.00 | $52.00 | $63.00 |
| +0.0pp | $21.00 | $32.00 | $44.00 | $56.00 | $68.00 |
| +1.5pp | $23.00 | $35.00 | $48.00 | $61.00 | $73.00 |
| +3.0pp | $25.00 | $38.00 | $52.00 | $65.00 | $79.00 |
Tornado — DCF/share swing by driver (widest first)
| Driver | Low | High | Swing |
|---|---|---|---|
| Op margin ±3pp | $21.00 | $68.00 | $48.00 |
| Revenue CAGR ±3pp | $38.00 | $52.00 | $14.00 |
| Terminal × ±15% | $38.00 | $51.00 | $13.00 |
| Capex intensity ±15% | $41.00 | $47.00 | $6.00 |
| WACC ±1pp | $42.00 | $47.00 | $5.00 |
Company lever — SoP/share vs Homebuilding multiple (AI re-rating) (base 15x)
| Multiple | 10.5x | 12.8x | 15.0x | 17.2x | 19.5x |
|---|---|---|---|---|---|
| SoP/share | $51.00 | $67.00 | $81.00 | $96.00 | $111 |
Peer Quality & Weighting
| Peer | Fwd P/E | Growth | Op margin | Quality | Weight cap |
|---|---|---|---|---|---|
| TOL | 10.94× | 2% | 15% | segment | 50% |
| KBH | 17.18× | 2% | 4% | direct | 100% |
| VFC | 15.43× | 4% | 4% | direct | 100% |
| BYD | 11.4× | 4% | 18% | direct | 100% |
Quality-weighted forward P/E: 14.1× (simple median 13.415×). Direct peers count 100%, segment 50%, broad 25%.
Historical-range cross-check: 52-week range $54.15–$72.50, centre $62.70 (-14% vs spot); spot sits at the 100th percentile of the range. Low-weight mean-reversion cross-check, not a fundamental anchor.
Risk / Reward & Margin of Safety
| Metric | Value |
|---|---|
| Upside to triangulated FV | $58.92 (-19% vs spot · triangulated FV) |
| Downside to bear case (Structural — Affordability / Rate-Lock Demand Reset) | $22.32 (-69% vs spot · bear scenario) |
| Reward/risk ratio | 0.3× |
| Margin of safety (FV vs spot) | -23% |
| P(price > spot) — Monte Carlo | 45% |
Reward/risk compares triangulated upside against the probability-weighted bear target, not the extreme tail. Bull case (Spike — Tight Supply Pricing): $150.
Company Overview & Business Model
Taylor Morn Home — CONSUMER CYCLICAL · RESIDENTIAL CONSTRUCTION. Taylor Morrison Home Corporation, is a public housing builder in the United States. The company is headquartered in Scottsdale, Arizona.
How it makes money.
| Segment | Rev mix | Growth | Op margin | Key driver |
|---|---|---|---|---|
| Homebuilding | 100% | +2% | 8% | new-home demand (rates, affordability, household formation) + gross-ma |
Edge. Narrow moat — Narrow competitive moat (inferred from a 11% operating margin and 11% ROE and the 'homebuilders' business model). Some pricing power / share stability; terminal multiple near the market.
Revenue-Segment Breakdown
The company-specific drivers behind the valuation — each segment carries its own growth, margin, multiple and capex intensity. (Tags: FACT reported · ESTIMATE from disclosures · INFERENCE judgment.)
| Segment | Revenue | Mix | Growth | Op margin | EBIT | Multiple | Capex % | Tag |
|---|---|---|---|---|---|---|---|---|
| Homebuilding | $7.6B | 100% | 2% | 8% | $0.6B | 15x | 2% | ESTIMATE |
| EBIT = segment revenue × operating margin (segment EBITDA not shown — per-segment D&A is not separately disclosed). |
Named Exposures
Demand & pricing cycle (FACT/ESTIMATE)
| Dimension | Assessment |
|---|---|
| driver | new-home demand (rates, affordability, household formation) + gross-margin cycle |
| net_debt_or_cash_b | -1.76 |
Capital intensity & shareholder returns (ESTIMATE)
| Dimension | Assessment |
|---|---|
| capex_pct_revenue | 0.02 |
| div_yield | None |
Structural risk vs optionality (INFERENCE)
| Dimension | Assessment |
|---|---|
| downside | affordability / rate-lock demand reset |
| upside | rate cuts + volume recovery |
Industry Context — Consumer Discretionary — Housing
This name sits in the Consumer Discretionary — Housing as a homebuilders. new-home demand (rates, affordability, household formation) + gross-margin cycle Its scenarios are not guessed in isolation — they inherit a single, shared view of the cluster's driver cycle, so the names that depend on the same event are mutually consistent.
Value chain: TOL (homebuilders) · TMHC (homebuilders) · FND (home_improvement) · KBH (homebuilders)
| Shared state | Capex path | House view | This name implies |
|---|---|---|---|
| Housing Downturn — Affordability / Rate Lock | 39% | 40% | |
| Mid-Cycle — Repair-Remodel + Orders | 33% | 32% | |
| Recovery — Rate Cuts / Volume | 28% | 28% |
Mapping note: name-level 'Structural — Affordability / Rate-Lock Demand Reset' (22%) + 'Cyclical Downturn — Order Slump' (18%) map to cluster Housing Downturn — Affordability / Rate Lock (40%); name-level 'Upcycle — Rate Cuts / Volume' (20%) + 'Spike — Tight Supply Pricing' (8%) map to cluster Recovery — Rate Cuts / Volume (28%) — the cluster row is the SUM of the mapped scenario probabilities, not a different estimate.
On the cluster's key downside — Housing Downturn — Affordability / Rate Lock () — this name implies 40% vs the cluster house view of 39% (in line with the house). The cluster's full cross-stock reconciliation governs that the names which ride the same capex cycle assign it comparable odds.
Structure: Shared State — The disc_housing cycle is the shared macro driver. Driver — housing turnover & new-home demand + interest rates + repair-remodel Dispersion — Members differ by cyclicality (quality compounders vs deep cyclicals).
Balance Sheet & Liquidity
| Metric | Value |
|---|---|
| Net debt | $1.5B — modestly levered |
| Net debt / EBITDA | 1.43x |
| Interest coverage (EBIT / interest) | 23.2x |
| Current ratio | 6.24x |
| Lease obligations | $0.1B |
| Cash & ST investments | $0.9B |
Balance-sheet data as of 2025-12-31 (Alpha Vantage).
Capital Allocation
| Metric | Value |
|---|---|
| Free cash flow | $0.8B |
| Buybacks / dividends | $0.4B / $0.0B |
| Total shareholder yield | 5.7% |
| Payout as % of FCF | 47.2% |
| Reinvestment (capex / OCF) | 4.7% |
| SBC as % of FCF | 3.6% |
| Allocation stance | balanced |
Free-Cash-Flow Quality
| Metric | Value |
|---|---|
| FCF margin | 10.6% |
| FCF conversion (FCF / net income) | 103.1% |
| FCF yield | 12.1% |
| Capex intensity (capex / revenue) | 0.5% |
| FCF − SBC (diagnostic) | $0.8B |
Accounting quality: SBC 1% of revenue; cash conversion (OCF/NI) 108% — cash-backed.
Competitive Moat
Narrow moat. Narrow competitive moat (inferred from a 11% operating margin and 11% ROE and the 'homebuilders' business model). Some pricing power / share stability; terminal multiple near the market.
Earnings-Call Disconfirmation & Sentiment
Derived signals from the MCH market-data store (Alpha Vantage transcripts + news). Quantitative tone only — a disconfirmation flag, not a substitute for reading the call.
Management vs analyst tone (2026Q1): management +0.35 vs analyst floor +0.00 → delta +0.35 (n=32 mgmt / 18 Q&A; 45th pctile across the S&P book, z -0.2).
Flag: TYPICAL — management-vs-analyst tone within the normal cross-sectional range.
| Quarter | Mgmt | Analyst | Delta |
|---|---|---|---|
| 2026Q1 | +0.35 | +0.00 | +0.35 |
| 2025Q4 | +0.46 | +0.00 | +0.46 |
| 2025Q3 | +0.27 | +0.20 | +0.07 |
| 2025Q2 | +0.32 | +0.16 | +0.16 |
News (last 365d, 238 articles): avg ticker sentiment +0.18 (bullish 31% / bearish 6%)
Consensus & Market Expectations
| Reference | Value |
|---|---|
| Street target (mean) | $66.75 (-8% vs spot · street) |
| House target | $74.40 (+11.5% vs street) |
| Sell-side coverage | 7 analysts (SB 1 / B 0 / H 5 / S 1 / SS 0; net score 0.07) |
| Consensus FY EPS | $6.41 (reference only — house values on EV/EBITDA) |
| Consensus FY revenue | $7.2B; house above (+8.9%) |
_Consensus figures: Alpha Vantage sell-side aggregates. Where the house view sits materially above or below the street, the divergence is itself a datum — see the thesis.
Catalyst Calendar
- 2026-07-22 (~-2d) — Quarterly earnings (AV EARNINGS_CALENDAR)
Forecast Track Record
- EPS surprise: beat 87.5% of the last 8 quarters; average surprise +22.5%.
Catalyst Timeline
6 catalysts in the next 90 days (of 15 tracked). Importance 1–3; confidence 0–1.
| When | Catalyst | Type | Importance | Confidence |
|---|---|---|---|---|
| 2026-07-29 (in 0d) | FOMC rate decision + press conference | macro | ●● | 0.8 |
| 2026-08-01 (in 3d) | July nonfarm payrolls / unemployment | macro | ●● | 0.8 |
| 2026-08-12 (in 14d) | July CPI | macro | ●● | 0.8 |
| 2026-09-16 (in 49d) | FOMC rate decision + SEP dot plot | macro | ●● | 0.8 |
| 2026-09-18 (in 51d) | Quarterly options-expiry cluster (3rd Friday) | opex_cluster | ● | 1.0 |
| 2026-10-14 (in 77d) | September CPI | macro | ●● | 0.8 |
| 2026-10-28 (in 91d) | FOMC rate decision + press conference | macro | ●● | 0.8 |
| 2026-12-09 (in 133d) | FOMC rate decision + SEP dot plot | macro | ●● | 0.8 |
| 2026-12-18 (in 142d) | Quarterly options-expiry cluster (3rd Friday) | opex_cluster | ● | 1.0 |
| 2027-01-27 (in 182d) | FOMC rate decision + press conference | macro | ●● | 0.8 |
| 2027-03-17 (in 231d) | FOMC rate decision + SEP dot plot | macro | ●● | 0.8 |
| 2027-03-19 (in 233d) | Quarterly options-expiry cluster (3rd Friday) | opex_cluster | ● | 1.0 |
| 2027-04-28 (in 273d) | FOMC rate decision + press conference | macro | ●● | 0.8 |
| 2027-06-09 (in 315d) | FOMC rate decision + SEP dot plot | macro | ●● | 0.8 |
_Sources: extended.catalysts, data/catalysts/
Scenario Macro & Key Risks
| Scenario | Macro assumption | Key risk |
|---|---|---|
| Structural — Affordability / Rate-Lock Demand Reset | Cluster state 'Housing Downturn — Affordability / Rate Lock' (house prob ~39%) | Path-dependency: a single disappointing print can shift the book toward the adjacent-bear state. |
| Cyclical Downturn — Order Slump | Cluster state 'Housing Downturn — Affordability / Rate Lock' (house prob ~39%) | Path-dependency: a single disappointing print can shift the book toward the adjacent-bear state. |
| Base — Mid-Cycle Orders + Margins | Cluster state 'Mid-Cycle — Repair-Remodel + Orders' (house prob ~33%) | Path-dependency: a single disappointing print can shift the book toward the adjacent-bear state. |
| Upcycle — Rate Cuts / Volume | Cluster state 'Mid-Cycle — Repair-Remodel + Orders' (house prob ~33%) | Path-dependency: a single disappointing print can shift the book toward the adjacent-bear state. |
| Spike — Tight Supply Pricing | Cluster state 'Recovery — Rate Cuts / Volume' (house prob ~28%) | Path-dependency: a single disappointing print can shift the book toward the adjacent-bear state. |
Decision Rules (Machine-Checked)
Stance: Hold — 0 bullish / 0 bearish / 0 caution rules triggered of 6 evaluable (0 lacked data).
| Rule | Condition | Observed | Triggered |
|---|---|---|---|
| R1-valuation-stretch | expected return vs fair value < -12 (upside_pct) |
2.69 | no |
| R2-valuation-opportunity | expected return vs fair value > 15 (upside_pct) |
2.69 | no |
| R3-street-revisions | street net rating stance < -0.25 (extended.consensus.street_score) |
0.07 | no |
| R4-earnings-quality | cash conversion of earnings < 80 (extended.accounting_quality.cash_conversion_pct) |
108.3 | no |
| R5-technical-breakdown | price vs 200-day SMA < 0.85 (technicals.sma_200) |
1.41 | no |
| R6-vol-regime-shift | IV/RV vol-risk premium > 1.4 (options_overlay.iv_rv) |
0.31 | no |
Machine-checked rules over disclosed inputs. The authored falsification triggers elsewhere in this report are analyst judgment and are NOT evaluated here. The stance is what the model's own rules read on this name; it does not modify the published research rating, and it is not advice to any reader.
Reasons the Thesis Could Fail (Falsifiable)
Pre-registered signals that would break the thesis — each polices a specific scenario boundary and is checked at every earnings update:
- Organic revenue growth / order backlog < flat-to-negative for two consecutive quarters (2 consecutive prints → disc_housing). Sustained demand rollover breaks the base case toward the recession scenario.
- FY revenue ($B) < 7.7 (next reported fiscal year → Structural — Affordability / Rate-Lock Demand Reset). The base case carries revenue from the $7.60B TTM base to ~$7.80B. Delivering less than half that step (below $7.70B) means the growth path the target is built on is not materialising — a shortfall of that size cannot be absorbed by the multiple.
- Probability-weighted fair value (PWEV) at the next re-run < 72.45 (any scheduled re-run → Structural — Affordability / Rate-Lock Demand Reset). PWEV falling below the $72.45 spot means the scenario-weighted core no longer supports upside on our own inputs; the 5-tier rating flips and the thesis is falsified without needing any external confirmation.
Fact / Inference / Speculation
- FACT: Spot $72.45; 52-week range $54.15–$72.50; engine rating HOLD; house target $74.40 (+3%). (source: Alpha Vantage 2026-07-24, 29 July 2026)
- INFERENCE: Triangulated FV $58.92 (-19% vs spot · triangulated FV); the rating tracks the Monte-Carlo + scenario-PWEV core; the cash-flow anchor sits below the multiple-discipline core.
- SPECULATION: At current prices the embedded bet is that Gross Margin keeps surprising favourably — an operating call the next two prints will test.
Conviction Score
52.0/100 (confidence band 40.3–63.6), 32th percentile of 854 covered names (as of 2026-07-30). Weighted composite under config ros-1.7.0 — every component and its inputs below.
| Component | Score (0–100) | Weight | Inputs |
|---|---|---|---|
| business quality | 54 | 15% | extended.fcf_quality.fcf_margin_pct, extended.balance_sheet.net_debt_to_ebitda, extended.accounting_quality.cash_conversion_pct |
| financial strength | 69 | 10% | extended.balance_sheet.net_debt_to_ebitda, extended.balance_sheet.interest_coverage |
| valuation | 53 | 15% | upside_pct |
| growth | 47 | 10% | reconciliation.ttm_revenue_billions, reconciliation.fy_guide_revenue_billions |
| earnings visibility | 88 | 10% | extended.forecast_accuracy.eps_surprise.beat_rate_pct |
| moat | 48 | 10% | enrichment.moat.rating |
| technical trend | 51 | 10% | technicals.rsi, technicals.sma_50, technicals.sma_200 |
| macro tailwinds | 11 | 10% | industry_context.house |
| risk profile | 46 | 10% | monte_carlo.prob_above_current, monte_carlo.p10, monte_carlo.p90, monte_carlo.median |
Score history: 50.7 → 50.7 → 52.0 → 52.0 → 52.0 → 52.0.
Probability-Weighted Return Profile
Horizon: 1 year — at this horizon CAGR equals total return by definition. Expected values are the probability-weighted sums over the full scenario set below.
| Scenario | Probability | Target | Total return | Contribution |
|---|---|---|---|---|
| Structural — Affordability / Rate-Lock Demand Reset | 22% | $22.32 | -69.2% | -15.2pp |
| Cyclical Downturn — Order Slump | 18% | $44.29 | -38.9% | -7.0pp |
| Base — Mid-Cycle Orders + Margins | 32% | $77.44 | +6.9% | +2.2pp |
| Upcycle — Rate Cuts / Volume | 20% | $124 | +70.5% | +14.1pp |
| Spike — Tight Supply Pricing | 8% | $150 | +107.6% | +8.6pp |
| Aggregate | Value |
|---|---|
| Expected return (gross, 1y) | +2.7% |
| Expected return net of SBC dilution | +2.7% |
| Outcome dispersion (σ, from MC p10–p90) | 59.2% |
| Expected Sharpe (rf 4%) | -0.02 |
| Downside expectation (prob-weighted loss branches) | -22.2% |
expected_return_pct is gross scenario math (reconciles to pwev_gross); expected_return_diluted_pct applies the SBC share-count dilution charge and matches the published PWEV-based target.
Expected Alpha
Expected return minus the return this name is REQUIRED to deliver for its risk (1-year horizon). Constants are pre-registered (preregistered-static (amendment #2, 2026-07-29); not fitted to MCH outcomes).
| Component | Value |
|---|---|
| Expected return (gross, 1y) | 2.7% |
| Risk-free rate | 4.13% (1y proxy (3m/2y midpoint; AV lacks a 1y tenor), as of 2026-07-27) |
| Beta (shrunk, 1y vs SPY) | 0.81 (as of 2026-07-24) |
| Equity risk premium | 4.5% |
| Size/liquidity premium | +100bp |
| Required return | 8.8% |
| Expected alpha | -6.1% |
| Alpha per unit risk (EA/σ) | -0.10 |
A negative expected alpha does not change the rating — it says the expected return does not clear the risk-adjusted hurdle at today's price. Rating mechanics are unchanged by this section.
Factor Exposures
Cross-sectional percentiles over 854 covered names (style scores sector-demeaned; thematic = return-beta to the theme's proxy ETF). 50 = estate median.
| Style | Percentile | Theme | Percentile | |
|---|---|---|---|---|
| Growth | 26 | AI | 61 | |
| Value | 88 | Cloud | 70 | |
| Quality | 35 | Semis | 60 | |
| Momentum | 57 | Consumer | 50 | |
| Low-Vol | 75 | Rates | 91 | |
| USD | 19 | |||
| Energy | 58 |
Market interaction: correlation vs SPY +0.24, vs QQQ +0.16 (trailing ~1y daily returns).
Sections withheld from publication under the MCH Analysis operating model (2026-09-30): contract-specific option structures and position sizing are not published. The rest of this report is preserved as published.
Rating Bridge
Rating = HOLD because:
- Probability-weighted scenario value implies +3% vs spot
- Monte Carlo median implies -7% vs spot
- DCF fair value implies -39% vs spot
- Bear case (Structural — Affordability / Rate-Lock Demand Reset) downside is -69% vs spot
- Net: reward/risk of 0.3× is not asymmetric enough for a Buy and not impaired enough for a Sell — hence Hold.
Model Appendix
DCF — line items
| Year | Revenue | Op income | − Capex | + D&A | FCF | PV(FCF) |
|---|---|---|---|---|---|---|
| FY+1 | $8B | $1B | $0B | $0B | $0B | $0B |
| FY+2 | $8B | $1B | $0B | $0B | $0B | $0B |
| FY+3 | $8B | $1B | $0B | $0B | $0B | $0B |
| FY+4 | $8B | $1B | $0B | $0B | $0B | $0B |
| FY+5 | $8B | $1B | $0B | $0B | $0B | $0B |
| Terminal | — | — | — | — | $0B × 13x | $4B |
FCF is bridged: NOPAT + D&A − Capex − ΔNWC (capex intensity 2% of revenue, weighted from the segments) — not a single conversion fudge.
WACC 10.0% · Σ PV(FCF) $2B + PV(terminal) $4B = EV $6B; − net debt $1.8B → equity $4B ÷ diluted shares 0.09B = $44.31/share (exit-multiple terminal).
- Gordon (perpetuity-growth) terminal at 2.5% → $46.55/share — a genuinely non-multiple, cash-based cross-check; the exit-multiple and Gordon values bracket the terminal-value risk.
- Incremental ROIC on the forecast capex ≈ 6% vs WACC 10% → below WACC — the incremental build is value-dilutive.
Peer set
| Peer | EV/Rev | Fwd P/E | Growth | Op margin |
|---|---|---|---|---|
| TOL | 1.44x | 10.94x | 2% | 15% |
| KBH | 0.952x | 17.18x | 2% | 4% |
| VFC | 1.125x | 15.43x | 4% | 4% |
| BYD | 2.213x | 11.4x | 4% | 18% |
| Median | 1.2825x | 13.415x | — | — |
Peer-median fwd P/E → —; EV/Rev → $86.82.
Weighted fair-value math
| Anchor | Value | Weight | Contribution |
|---|---|---|---|
| DCF | $44.31 | 47% | $20.68 |
| Scenario PWEV | $74.40 | 33% | $24.80 |
| Monte Carlo median | $67.22 | 20% | $13.44 |
| Triangulated | — | 100% | $58.92 |
Assumption Register
| Assumption | Value | Used in | Source |
|---|---|---|---|
| WACC | 10.0% | DCF discount rate | estimate (CAPM) |
| Terminal multiple | 13× | DCF exit value | estimate (peer-anchored) |
| Terminal growth | 2.5% | DCF Gordon terminal | estimate |
| SBC dilution | 0.0%/yr | PWEV, MC, DCF (charged once) | estimate (from SBC/rev) |
| EPS basis | consensus forward EPS (broker-adjusted, non-GAAP) | all forward P/E & scenario multiples | definition |
Sensitivity-ranked drivers (widest fair-value swing first): Op margin ±3pp (48.0); Revenue CAGR ±3pp (14.0); Terminal × ±15% (13.0); Capex intensity ±15% (6.0); WACC ±1pp (5.0).
Inputs, Sources & Confidence
Every load-bearing input, labelled by type and confidence. (reported fact · company guidance · consensus estimate · market data · house estimate · inference.)
| Input | Value | Type | Source | Confidence | Used in |
|---|---|---|---|---|---|
| Revenue TTM | $7.6B | reported fact | 10-K/10-Q via AV | High | Forecast base, EV/Rev |
| FY+1 guided revenue | $7.8B | company guidance | Company guidance | Medium | Forecast, SoP |
| Consensus FY EPS | $6.4068 | consensus estimate | Sell-side consensus via AV | Medium | Variant perception |
| Diluted shares | 0.092B | reported fact | 10-K via AV | High | Market cap, per-share |
| Net debt / cash | $1.512B | reported fact | Balance sheet via AV | High | EV, DCF equity bridge |
| WACC | 10.0% | house estimate | CAPM (beta/rf) | Medium | DCF discount rate |
| Terminal multiple | 13× | house estimate | Peer/historical range | Medium | DCF exit value |
| Terminal growth | 2.5% | house estimate | Long-run GDP+ | Medium | DCF Gordon terminal |
Load-Bearing Assumptions
DCF: WACC 10%, terminal multiple 13×, FY+5 revenue $8B. Triangulation leans 47% on DCF, 33% on PWEV.
Appendix & audit trail — source log, data provenance, disclosures
Source Log
| Source | Type | Date | Used for | Reference |
|---|---|---|---|---|
| Alpha Vantage — GLOBAL_QUOTE / OVERVIEW | market data | 2026-07-24 | Price, market cap, EV, 52-week range, forward P/E | Alpha Vantage 2026-07-24 |
| Company income statement (10-K / 10-Q) via Alpha Vantage | reported fact | 2026-07-24 | Revenue, gross/operating margin, EBIT, interest expense | INCOME_STATEMENT / latest annual |
| Company balance sheet (10-K / 10-Q) via Alpha Vantage | reported fact | 2026-07-24 | Cash, debt, net debt, leases, equity, coverage | BALANCE_SHEET / latest annual |
| Company cash-flow statement (10-K / 10-Q) via Alpha Vantage | reported fact | 2026-07-24 | Operating cash flow, capex, FCF, buybacks, dividends, SBC | CASH_FLOW / latest annual |
| Company earnings releases via Alpha Vantage | reported fact | 2026-07-24 | Reported EPS, surprise history | EARNINGS / quarterly |
| Sell-side consensus via Alpha Vantage | consensus estimate | 2026-07-24 | Forward revenue/EPS consensus, analyst count | EARNINGS_ESTIMATES |
| Earnings calendar via Alpha Vantage | market data | 2026-07-24 | Next earnings date, catalyst timing | EARNINGS_CALENDAR |
| Company guidance | company guidance | 2026-07-24 | FY guided revenue / non-GAAP EPS basis | company guidance / earnings call |
| MCH segment model (from filings & disclosures) | house estimate | 2026-07-24 | Segment revenue, margins, multiples, AI decomposition | company_context (authored, tagged) |
| MCH qualitative analysis | inference | 2026-07-24 | Moat, regulatory risk, scenario macro, catalysts | company_context enrichment (authored) |
| MCH investment thesis & falsification triggers | house estimate | 2026-07-24 | Thesis, anti-thesis, thesis-break signals | authored §5.3 |
Citation coverage: 11/14 mandated claims sourced. Filing URLs are not available via the market-data provider; company statements are cited as 10-K/10-Q via Alpha Vantage.
Data Sources
- Prices, fundamentals, options chain, earnings — Alpha Vantage.
- Company filings (10-K / 10-Q) — SEC filings via EDGAR.
Disclosures & Limitations
This report is for informational and research purposes only. It is not personalised investment advice and does not consider any investor's objectives, financial situation, risk tolerance, tax position, or liquidity needs.
- This report is produced by the MCH Advisory quantitative research engine — valuation, scenarios, Monte Carlo and the decision layer are generated systematically from the disclosed inputs and the archetype/industry driver sets, and reviewed rather than written name-by-name. Every figure reconciles to the appendix and every score exposes its inputs.
- No suitability assessment has been performed for any individual.
- Market data may be delayed or inaccurate; figures are as of the analysis date.
- Model outputs (fair values, targets, scenario probabilities) are estimates and may be wrong.
- Forecasts are uncertain; past performance is not indicative of future returns.
- The author or publisher may hold positions in securities mentioned.
- Users should verify information against primary sources (company filings) before acting.
- Investing involves risk of loss; there is no guarantee any target price is achieved.
- Ratings follow a defined research methodology (12-month expected-return thresholds), not individual circumstances.